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$1.9 Million Civil Penalty for Product Safety Violations

Thursday, October 12, 2017

Sandler, Travis & Rosenberg Trade Report

The Consumer Product Safety Commission reports that a large U.S. consumer products distributor will pay $1.94 million in civil penalties for failing to timely report dangerously defective products and continuing to distribute them following a recall. The company has also been ordered to maintain systems and internal controls to ensure future compliance with the Consumer Product Safety Act and to report back in six months to verify it has made improvements.

The CPSA requires manufacturers, retailers, and distributors of consumer products to report immediately to the Commission information that reasonably supports the conclusion that a product contains a defect that could create a substantial product hazard or creates an unreasonable risk of serious injury. A CPSC press release states that in this case the company received approximately 1,600 reports of product defects between 2008 and 2012 but did not report the incidents until April 2012, after it was served with a private class action complaint. In addition, the company implemented a design change in 2009 to remedy the defect but continued to sell the old items through the end of that year.

The CPSA also prohibits companies from continuing to distribute items that have been recalled. In this case the company recalled the defective items after notifying the CPSC but then distributed more than 600 additional products after the recall announcement.